Full details and reaction from the PCS, FDA and Prospect Unions as the Cabinet Office makes its final offer on fresh reform of the Civil Service Compensation Scheme

The Cabinet Office has set out its proposed cuts to civil service redundancy pay after months of talks with trade unions.

Ministers announced earlier this year that they wanted to revisit the Civil Service Compensation Scheme — last renegotiated in 2010 — as part of a wider bid to cut the cost of exit payouts across the public sector.

But the move was met with much criticism from civil service unions, who pointed out that extensive negotiations on the scheme had taken place just six years ago.

PCS, the biggest civil service union, chose not to take part in talks with the Cabinet Office in protest at what it called the “outrageous” pre-conditions imposed by the government.

Unions have now been given sight of the Cabinet Office’s final offer, which continues to propose cuts to all three forms of exit payout in the civil service, but rows back from some elements of its initial proposals. Key unions, however, remain divided in their response to the shake-up.

The key elements of the offer are:

The standard “tariff” used to calculate exit payouts will be cut by more than 25%. At present, payouts under all three forms of exit — voluntary exit, voluntary redundancy, and compulsory redundancy — award departing staff a month's pay for every year served. The final offer will see this tariff cut to three weeks’ pay for every year served.

Voluntary exit payments will be capped at 18 months’ salary, down from the current 21 months’, but higher than the 15 months’ outlined in public sector-wide Treasury plans published earlier today.

Voluntary redundancy payments will be capped at 18 months’ salary. This is down from the current 21 months’ but higher than the 12 month cap floated by the Cabinet Office earlier this year.

Compulsory redundancy payouts will be capped at nine months’ salary,down from the current 12 months. This proposal remains unchanged from the original Cabinet Office consultation.

Compulsory redundancy notice periods will be set at three months for new starters to the civil service, down from the current six months. CSWunderstands that there will be no change to redundancy notice periods for existing officials.

Employer-funded early access to pension provision will not be removed from the scheme as originally suggested by the Cabinet Office, but access will be limited to those aged 55, the minimum pension age for a new entrant to the scheme.

The maximum salary for the calculation of exit payments will remain at £150,000, rather than the £80,000 proposed in the Treasury’s public sector-wide plans.

The “salary underpin”, designed to protect lower earners when calculating redundancy payouts, will rise from £23,000 to £24,500.

There will be a “revised” 2016 Protocol for Civil Service Redundancies, which the Cabinet Office says will “speed up the exit process” and which unions say will offer greater protection to the Senior Civil Service for the first time.

“This offer gives us an effective, cost-efficient system to help civil servants leave when the time is right and puts the Civil Service Compensation Scheme on a sustainable footing for a generation" - Cabinet Office minister Ben Gummer

CSW understands that the unions involved in talks with the Cabinet Office over the deal also sought a specific statement from minister Ben Gummer stressing that the scheme would not be revisited in the near future, after strongly condemning the decision to reopen talks just six years after the 2010 deal.

Launching the Cabinet Office’s offer to the unions, a statement from Gummer said: "Making sure the people of the UK have the best possible civil service means being able to recruit and retain the best people possible.

“The government is reforming the Civil Service Compensation Scheme to bring it into line with wider compensation reforms across the public sector.

“This offer gives us an effective, cost-efficient system to help civil servants leave when the time is right and puts the Civil Service Compensation Scheme on a sustainable footing for a generation."

Union splits

Perhaps the most significant change from the initial Cabinet Office proposals in the final offer made to unions today is the decision not to create a difference between voluntary exits and voluntary redundancies.

The Cabinet Office originally said that “well over” 90% of voluntary exit schemes were on the same terms as those under voluntary redundancy, incentivising staff to stay in post for longer and making it hard for employers to manage their workforce effectively.

However, the final offer to the unions steps back from making voluntary redundancies less attractive in financial terms than voluntary exits, with the Cabinet Office saying it will instead focus on “reforming the exit process to deliver cost savings and a more efficient process”.

Reaction to the Cabinet Office’s proposals has, however, laid bare some of the ongoing tensions between civil service unions, with those who took part in the talks hailing concessions and those who sat the process out branding it a “sham”.

“The choice facing the FDA was whether to stand on the side-lines complaining about the injustice of further reductions in these payments, or to engage in negotiations with a view to getting the best possible deal for members" - FDA chief Dave Penman

Dave Penman, general secretary of the FDA union — which opted to take part in the talks — said that the government had “failed to give a coherent explanation of why further radical changes in the value of civil service redundancy payments are necessary” and had “rejected all representations to think again and made clear that they would proceed regardless”.

However, he defended the FDA’s decision to enter negotiations.

“The choice facing the FDA was whether to stand on the side-lines complaining about the injustice of further reductions in these payments, or to engage in negotiations with a view to getting the best possible deal for members,” he said.

“The FDA has taken the latter course, as it did in 2010, and together with other unions has negotiated a package which, whilst not ideal, will limit much of the unfairness of the Government’s more radical intentions and indeed improves the scheme in some areas.”

Garry Graham, deputy general secretary of Prospect — the union of specialists which also took part in the talks — struck a similar tone, saying that while his union was “angry” it had been “stretching every sinew to negotiate the best possible outcome on behalf of our members”.

“Yes, we and members are angry at the government that they have seen fit to revisit so readily the terms negotiated in 2010,” he added. “The choice was, however, you can wring your hands on the side-lines and complain or roll up your sleeves and get involved in detailed and difficult negotiations. We chose the latter.”

But the PCS union, which sat out the talks alongside Unite and the POA, said the consultation had been “little more than a sham” and hit out at the “mealy mouthed” reassurance from the Cabinet Office that it would not seek further changes.

"These latest cuts in redundancy terms, coming on the back of vicious cuts in 2010, are a further kick in the teeth to our members from an employer that has no regard for their wellbeing nor the important work that they do." - PCS general secretary Mark Serwotka

PCS general secretary Mark Serwotka said: "These latest cuts in redundancy terms, coming on the back of vicious cuts in 2010, are a further kick in the teeth to our members from an employer that has no regard for their wellbeing nor the important work that they do.

"These cuts to redundancy pay are a cynical attempt to lay the ground for further job cuts on the cheap in the public sector as this government continues to pursue its ideological objective of dismantling public services. PCS will continue to campaign against these proposals and to defend public services and our members' terms and conditions.”

A PCS statement said its national executive committee would meet shortly to consider its formal response to the Cabinet Office. Graham said Prospect would meanwhile meet “later this week to consider the final offer from the Cabinet Office”, while the FDA has said it will ballot its members electronically.

The Cabinet Office has made clear that, if its offer is not accepted, it will press ahead with a Compensation Scheme overhaul which will see both voluntary exit and voluntary redundancy payouts capped at the Treasury-mandated 15 months’.